Is your charity solving problems or just spending money?
Many funders are asking that question, and sometimes just that bluntly.
The question of whether there are too many ineffective
nonprofits competing for too few non-government dollars has been an ongoing
discussion for quite some time. The advent of the 1023EZ is
onceagain creating interest not just in answering that question, but solving
the problem.
There are two polarizing reasons
why nonprofit funding woes continue to proliferate. One, nonprofit founders
feel that they are serving a need not otherwise addressed in their local area,
and two, funders have hit the wall in terms of how many small organizations
they can fund while still achieving their own missions.
One bone, many dogs
Obviously, some nonprofits are all chasing the same dollars
for the same causes.
One of the first things I do when a prospective nonprofit founder
contacts me for help starting a new venture is to see how many other groups are
tackling the same problem in a relatively tight (say within a fifty mile
radius) geographic area. I also check to see
how many national groups have chapters or members in that area.
You know what? Grantors do exactly the same thing and woe be onto you if you are just one face in a crowd.
One very popular type of charitable focus, and a crowded one, is on alleviating
hunger. Quite frankly, one or two national groups pretty much have that arena
sewed up tight, speaking strictly from a funding standpoint. You can become one
of their network members, but striking out totally on your own may not result
in success.
Sure, your new food pantry might be the only one in its
area, but where is the money going to come from to sustain it? Taking in a few
thousand dollars a year might have a positive local outcome, but is it
sustainably resulting in fewer hungry people?
Generally, when nonprofits think about mergers they think of
other similar agencies. For instance a soup kitchen might collaborate with a
larger food pantry or food bank.
That could be the wrong approach.
A new look at an old
problem
What about partnering with organizations that remove the
root cause of hunger, which is generally considered to be poverty?
Consider forming a sort of local or regional alliance that
addresses all the causative factors that result in hunger.
A local food bank could seek out another local group that
provides help in getting GED's. Those two could enlist the aid of a group that
provides specific technical training or scholarships. Those three could work
with a local economic development group seeking to bring in more jobs to the
area. Those four could work with a group providing childcare for working
parents.
Each of those groups has their own particular expertise, but
together, they could actually offer grantors the chance to end the need for supplemental feeding programs.
That's the kind of impact that impresses grantors.
By forming a regional or even local community improvement
collaboration, each agency could pool their manpower, marketing and yes, their
dollars to create complete outcomes.
Make no mistake, this type of organization is no picnic to
form, and even less easy to manage. This definitely a time when you want expert
legal and financial advice.
Too many egos, too many pet projects and too little money
dooms more than a few collaborations. If one organization gets money from a
major donor restricted to say, just purchasing food, and another gets nothing
for school supplies, all hell breaks
loose.
I have intimate knowledge of how that works, having written
a successful five-year grant for several million dollars, only to have the
partners start fighting over the funds when they were awarded. Within less than
a year, the cornerstone charity backed out, leaving four smaller agencies
incapable of meeting the renewal terms of the grant in the second year. In the
end, no one got the rest of the money, and no one benefited.
This "collaboration" was strictly a gentleman's
agreement, and when issues arose there was no contract or formal agreement to
prevent the largest participant nonprofit from bolting.
Funders currently hold
all the aces
If nonprofits don't find better ways to fix problems,
funders will do it for them. The reason the big-money, high-profile charities
get all the money is because they are perceived as being more effective.
As I look for funding for smaller organizations, I'm seeing
more and more foundations closing their public application processes. Others are
starting to set minimum revenue qualifiers in the hundreds of thousands and
even millions of dollars for consideration of proposals.
Still, some funders do recognize that size isn't necessarily an
indicator of effectiveness, and they are looking for innovative proposals.
A relatively small
collaborative venture might well be more effective than a huge national
organization that is strangled by its own size. Many large nonprofits have been
plagued by scandal that resulted primarily because the national organization
was far too insulated from accountability by its sheer size.
Nevertheless, faced with the inevitable reality that there just
isn't enough money to go around, funders are attacking the problem by
prioritizing in favor of larger or at least potentially more effective organizations.
Community collaborations could be the answer to being shut
out all together.
